Contest Trader

Don't miss the chance to cash-in prizes totaling

$10.000
Register here for the Ultimate demo trading competition

Earnings season not able to shift focus from pandemic – Market Overview – October 27

Earnings season not able to shift focus from pandemic – Market Overview – October 27

European stock indices suffer considerable losses amid a worrying epidemiological situation with measures to restrict mobility in many European capitals and with increasing infection figures

European stock indices suffer considerable losses amid a worrying epidemiological situation with measures to restrict mobility in almost all European capitals and with infection figures that exceed the peaks experienced in the first wave of the pandemic.

Better results than expected in the European banking sector are not enough to stop the fall in the indices dragged down by stocks in the energy sector, which is concerned about the short evolution of the demand for crude oil caused mainly by reducing mobility globally.

The German Germany30 index has been in continuous losses for more than a week and is leaning on 200-day SMA around 12100, representing a main support for this index.

A bearish break in this zone would produce further falls and the beginning of a downtrend towards the levels of 11400 and 11500 as intermediate support and with a theoretical target at the levels of 11000.

US Elections

The proximity of the North American elections also supposes another factor of uncertainty in the markets that prevents recovery movements in the stock markets in general.

In the case of the German index, a victory for the Democratic candidate Joe Biden, the favorite in the electoral polls so far, would be a relief since it would be interpreted positively by the market as this candidate is less conducive to implementing protectionist measures in international trade, something that for most of Trump's term has been threatening European industry and has been a significant concern.

The US economic figures published today, Durable goods, and Consumer confidence will not be a catalyst for the market since investors' eyes are more focused on the evolution of the pandemic and the elections for the next week.

Next Thursday, the ECB's governing council will meet, and although no change in its monetary policy is expected, the possibility of a surprise is still open. Should it occur, either due to an intensification of its expansionary policy or due to comments by the president of the ECB hinting at it, it would have an effect, especially on the price of the Euro.

EUR/USD, for the moment, continues to be pressured downwards mainly by the strength of the Dollar, which continues to act as a safe-haven currency in the face of the fall in the stock markets and the general uncertainty situation.

The pair is near a short-term support zone located around 1.1795; any action or communication from the ECB that is interpreted in the market as negative for the single currency could act as a catalyst for further losses up to the 1.1760 zone or even to the primary support of 1.1700.

This information/research prepared by Miguel Ruiz (“the research analyst”) does not take into account the specific investment objectives, financial situation or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.

The research provided does not constitute the views of JME Financial Services (Pty)Ltd nor is it an invitation to invest with JME Financial Services (Pty)Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.

As of the date the report is published, the research analyst and his/her spouse and/or relatives who are financially dependent on the research analyst, do not hold interests in the securities recommended in this report (“interest” includes direct or indirect ownership of securities).

The research analyst in not employed by JME Financial Services (Pty)Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation or particular financial needs before making a commitment to invest.

The laws of the Republic of South Africa shall govern any claim relating to or arising from the contents of the information/ research provided.